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6 Critical Questions to Help Businesses Cut Through the AI Hype

Don't buy an artificial-intelligence 'solution' just because you can. Ask how AI's strengths align with your company goals and supplement other resources.

It’s always gratifying when experts confirm what you’ve suspected. Research firm Gartner put a shot of reality into our morning coffee this past summer with its critical analysis that artificial intelligence (AI) had reached the “peak of inflated expectations.” Frankly, I think a lot of technology vendors are blowing smoke about their capabilities.

If your expectations were for Elon Musk-worrying AI, dial them back to the level of business software. It's actually less mundane than it sounds. AI already has changed how we use data to make sense of our world. It’s also become a corporate fashion. For every AlphaGo Zero there are a thousand firms -- startups and established companies -- sticking the AI label on their wares like pinstripes on 1980s cars.

I don’t doubt that the last few years have seen significant and rapid progress in AI. What I mistrust is the crescendo of hype, which echoes the tech bubble of the late 1990s and early 2000s. The risk: buying into over-exuberant promises rather than products with a proven return on investment (ROI). Hype clouds our judgment, sometimes intentionally.

If you share my skepticism, but likewise sense an important opportunity and want to avoid excessive caution, here are six questions to help you tune your BS detector.

What business problem am I trying to solve?
This is the most important question, and it has nothing whatsoever to do with AI. Granted, a few firms will find value in experimentation, but open-ended projects should be treated with extreme caution. Better to clearly define the business problem you want to solve.

You should evaluate any business investment against three criteria: Will it increase revenue, reduce costs or mitigate risk? Anchoring new technology to at least one of these fundamentals will establish its value. After that, assigning ownership and accountability is the best way to keep a technology initiative on track.

Why do I need AI to solve this problem?
Maybe you don’t. True AI acquires and applies knowledge and skills. It’s good for situations in which variability and novelty exist, but it’s difficult to build and therefore commands a premium. Consider the complexity of a self-driving car navigating busy city streets. Does your business problem involve continual unpredictability?

Machines that get incrementally better at a task sound compelling, but you need to focus on the outcomes delivered and not the technology used to achieve them. Will you gain a margin of improvement that makes the cost of AI worthwhile? Figure out a test to evaluate the size of the margin. Run it on paper and again in a proof-of-concept project. Make sure AI earns its premium.

Do I have sufficient data to use AI?
The best AI solutions outperform people at specific tasks such as recognizing cancer cells in scans or finding errant traders in an investment bank. But teaching a machine to make sense of messy and inconsistent data requires extensive training. AI uses models to make sense of the world and generalize. Finding enough examples to build a good model can be difficult.

Healthcare systems or banks can draw on extensive historic data. Can you? Even if you can, trawling through it to find relevant examples can be time-consuming and costly. To overcome this obstacle, some companies have started to work on AI model-training software that makes the process quicker and cheaper. Even so, it's a tough assignment whenever data is scarce.

Should I build or buy an AI solution?
If you’re trying to embed AI into your own products or services, an in-house capability might make sense. Still, don’t underestimate the resources and specialized expertise involved. A carefully selected partner may offer a quicker path to glory.

If you're tackling a known business problem, you’ll likely be better off working with an experienced vendor. Don’t be blinded by technology; whatever you buy will need to be customized or adapted to your environment and requirements. Focus on your vendor's understanding of your business domain and the type of data the consultant will need to leverage.

How well does the vendor know my domain?
Some vendors claim AI makes domain experience irrelevant. Don’t believe it. It's quicker and less stressful to work with a consultant who doesn’t need to learn your business from scratch.

Check any potential vendor's relevant experience and partnerships. Can the vendor's leaders give production examples of comparable problems solved for others? If your problem truly is unique, seek experts who bring experience in dealing with parallel challenges -- perhaps in a different industry with similar sorts of data.

Is there a proven ROI?

In Gartner’s report, the “peak of inflated expectations” is followed by the similarly whimsical “trough of disillusionment.” AI will lose its luster as technology buyers look past blithe promises and start demanding proven results.

In my opinion, that’s merely sensible business practice. So why be patient? Ask to see ROI measures today. Your smart money is on solutions that don’t involve an extended learning curve for the buyer or the vendor.

While I’m obviously a bit of a cynic, I’ve seen firsthand the difference that genuine AI can make. Machines can take on tasks that are important but arduous for people -- and do them better. It does more than save time or give a nudge to performance. It opens space for a shift in organizational change that reaps far greater rewards. That’s the true promise of AI, but realizing it takes more than clever software.

Amara’s law states that “we tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” It's sound advice. Leaders face the twin challenge of deciding if an investment in AI can create value in the near term while figuring out how to adapt their organizations for a world in which AI is ubiquitous.

Fostering positive experiences and making investments that deliver a healthy ROI will help reveal what’s at stake and lay the foundation for deeper change ahead. Heeding business fundamentals rather than hype will allow organizations to make smart choices today and build their experience of AI for the future.

How Important Are Small Businesses to Local Economies?

While small businesses may not generate as much money as large corporations, they are a critical component of and major contributor to the strength of local economies. Small businesses present new employment opportunities and serve as the building blocks of the United States' largest corporations.

Contributions
A small business is defined as a business (corporation, limited liability company or proprietorship) with 500 employees or less. According to the U.S. Small Business Administration (SBA), small businesses represent 99.7 percent of all employer firms. Since 1995, small businesses have generated 64 percent of new jobs, and paid 44 percent of the total United States private payroll, according to the SBA.

Economic Growth
Small businesses contribute to local economies by bringing growth and innovation to the community in which the business is established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. Small businesses tend to attract talent who invent new products or implement new solutions for existing ideas. Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business functions through outsourcing.

Adaptability to Changing Climates
Many small businesses also possess the ability to respond and adapt quickly to changing economic climates. This is due to the fact that small businesses are often very customer-oriented. Many local customers will remain loyal to their favorite small businesses in the midst of an economic crisis. This loyalty means that small businesses are often able to stay afloat during tough times, which can further strengthen local economies. Small businesses also accumulate less revenue than larger corporations, meaning they may have less to lose in times of economic crisis.

Schools and Local Government Offices
When consumers patronize local small businesses, they are essentially giving money back to their local community. A thriving local business will generate high levels of revenue, which means that the business will pay higher taxes, including local taxes. This money is then used for local police and fire departments as well as schools.

Future Growth
Small businesses do not always stay small. Large corporations, such as Nike and Ben and Jerry’s, started off as small businesses that grew to become major players in the national and international marketplace. Many computer-industry leaders began as “tinkerers,” working on hand-assembled machines out of their garages. Microsoft is a prime example of how a small business idea can change the world. Small businesses that grow into large businesses often remain in the community in which the business was first established. Having a large corporation headquartered in a community can further help provide employment and stimulate the local economy.

5 Biggest Challenges Facing Your Small Business

Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many standard challenges that face every business whether they are large or small. These include things like hiring the right people, building a brand and so on. However, there are some that are unique to small businesses - ones most large companies have grown out of long ago. We'll look at the 5 biggest challenges in this article.

Client Dependence
If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying the client base is vital to growing a business, but it can be difficult – especially when the client in question pays well and on time. For many small businesses, having a client willing to pay on time for a product or service is a godsend.

Unfortunately, this can result in a longer term handicap because, even if you have employees and so on, you may be still acting as a sub-contractor for a larger business. This arrangement allows the client to avoid the risks of adding payroll in an area where the work may dry up at any time. All of that risk is transferred from the company to you and your employees. This can work out fine provided that your main clients have a consistent need for your product or service. However, it is generally better for a business to have a diversified client base to pick up the slack when any single client quits paying.

Money Management
Having enough cash to cover the bills is a must for any business, but it is also a must for every individual. Whether it is your business or your life, one will likely emerge as a capital drain that puts pressure on the other. In order to head off this problem, small businesses owners must either be heavily capitalized or be able to pick up extra income to shore up cash reserves when needed. This is why many small businesses start out with the founders working a job and building a business simultaneously. While this split focus can make it difficult to grow a business, running out of cash makes growing a business impossible.

Money management becomes even more important when cash is flowing into the business and to the owner. Although handling business accounting and taxes may be within the capabilities of most business owners, professional help is usually a good idea. The complexity of a business' books go up with each client and employee, so getting an assist on the book keeping can prevent it from becoming a reason not to expand.

Fatigue
The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear that their business will stall in their absence, so they avoid taking any long breaks away from work to recharge. When fatigue sets in, the weariness with the hours and the results can lead to rash decisions about the business, including the desire to abandon it completely. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.

Founder Dependence
If you get hit by a car, is your business still producing income the next day? A business that can't operate without its founder is a business with a deadline. Many businesses suffer from founder dependence, and this dependence is often caused by the founder being unable to let go of certain decisions and responsibilities as the business grows. Meeting this challenge is easy in theory – a business owner merely has to give over more control to their employees or partners. In practice, however, this is a big stumbling block for founders because it usually involves compromising (at least initially) on the quality of work being done until the person doing the work learns the ropes.

Balancing Quality and Growth
Even when a business is not founder dependent, there comes a time when the issues from growth seems to match or even outweigh the benefits. Whether a service or a product, at some point a business must sacrifice in order to scale – this may mean not being able to personally manage every client relationship or not inspecting every widget.

Unfortunately, it is usually that level of personal engagement and that attention to detail that makes a business semi-successful. Therefore, many small business owners often find themselves tied to these habits to the detriment of the company's growth. There is a large middle ground between shoddy work and an unhealthy obsession with quality, so it is up to the business owner to navigate the company's processes towards a compromise that allows scale without hurting the brand.

The Bottom Line
These are challenges, but not death sentences. One of the worst things a would-be-business owner can do is to go into a small business without considering the challenges ahead. We've looked at some things that can help make these challenges easier, but there is no avoiding them. An important step in overcoming a challenge is knowing the size of that challenge. Besides, a competitive drive is often one of the reasons people start their own business and every challenge represents another opportunity to compete.

Mentally Strong People: The 13 Things They Avoid

For all the time executives spend concerned about physical strength and health, when it comes down to it, mental strength can mean even more. Particularly for entrepreneurs, numerous articles talk about critical characteristics of mental strength—tenacity, “grit," optimism, and an unfailing ability as Forbes contributor David Williams says, to “fail up.”

However, we can also define mental strength by identifying the things mentally strong individuals don’t do. Over the weekend, I was impressed by this list compiled by Amy Morin, a psychotherapist and licensed clinical social worker, that she shared in LifeHack. It impressed me enough I’d also like to share her list here along with my thoughts on how each of these items is particularly applicable to entrepreneurs.

Waste Time Feeling Sorry for Themselves
You don’t see mentally strong people feeling sorry for their circumstances or dwelling on the way they’ve been mistreated. They have learned to take responsibility for their actions and outcomes, and they have an inherent understanding of the fact that frequently life is not fair. They are able to emerge from trying circumstances with self-awareness and gratitude for the lessons learned. When a situation turns out badly, they respond with phrases such as “Oh, well.” Or perhaps simply, “Next!

Give Away Their Power
Mentally strong people avoid giving others the power to make them feel inferior or bad. They understand they are in control of their actions and emotions. They know their strength is in their ability to manage the way they respond.

Shy Away from Change
Mentally strong people embrace change and they welcome challenge. Their biggest “fear," if they have one, is not of the unknown, but of becoming complacent and stagnant. An environment of change and even uncertainty can energize a mentally strong person and bring out their best.

Waste Energy on Things They Can’t Control
Mentally strong people don’t complain (much) about bad traffic, lost luggage, or especially about other people, as they recognize that all of these factors are generally beyond their control. In a bad situation, they recognize that the one thing they can always control is their own response and attitude, and they use these attributes well.

Worry About Pleasing Others
Know any people pleasers? Or, conversely, people who go out of their way to dis-please others as a way of reinforcing an image of strength? Neither position is a good one. A mentally strong person strives to be kind and fair and to please others where appropriate, but is unafraid to speak up. They are able to withstand the possibility that someone will get upset and will navigate the situation, wherever possible, with grace.

Fear Taking Calculated Risks
A mentally strong person is willing to take calculated risks. This is a different thing entirely than jumping headlong into foolish risks. But with mental strength, an individual can weigh the risks and benefits thoroughly, and will fully assess the potential downsides and even the worst-case scenarios before they take action.

Dwell on the Past
There is strength in acknowledging the past and especially in acknowledging the things learned from past experiences—but a mentally strong person is able to avoid miring their mental energy in past disappointments or in fantasies of the “glory days” gone by. They invest the majority of their energy in creating an optimal present and future.

Make the Same Mistakes Over and Over
We all know the definition of insanity, right? It’s when we take the same actions again and again while hoping for a different and better outcome than we’ve gotten before. A mentally strong person accepts full responsibility for past behavior and is willing to learn from mistakes. Research shows that the ability to be self-reflective in an accurate and productive way is one of the greatest strengths of spectacularly successful executives and entrepreneurs.

Resent Other People’s Success
It takes strength of character to feel genuine joy and excitement for other people’s success. Mentally strong people have this ability. They don’t become jealous or resentful when others succeed (although they may take close notes on what the individual did well). They are willing to work hard for their own chances at success, without relying on shortcuts.

Give Up After Failure
Every failure is a chance to improve. Even the greatest entrepreneurs are willing to admit that their early efforts invariably brought many failures. Mentally strong people are willing to fail again and again, if necessary, as long as the learning experience from every “failure” can bring them closer to their ultimate goals.

Fear Alone Time
Mentally strong people enjoy and even treasure the time they spend alone. They use their downtime to reflect, to plan, and to be productive. Most importantly, they don’t depend on others to shore up their happiness and moods. They can be happy with others, and they can also be happy alone.

Feel the World Owes Them Anything
Particularly in the current economy, executives and employees at every level are gaining the realization that the world does not owe them a salary, a benefits package and a comfortable life, regardless of their preparation and schooling. Mentally strong people enter the world prepared to work and succeed on their merits, at every stage of the game.

Expect Immediate Results
Whether it’s a workout plan, a nutritional regimen, or starting a business, mentally strong people are “in it for the long haul”. They know better than to expect immediate results. They apply their energy and time in measured doses and they celebrate each milestone and increment of success on the way. They have “staying power.” And they understand that genuine changes take time. Do you have mental strength? Are there elements on this list you need more of? With thanks to Amy Morin, I would like to reinforce my own abilities further in each of these areas today. How about you?